Chapter 12 Flashcards
Meaning they are financed through contributions from employees, employers, and self-employed persons, as well as returns on the pension fund
Contributory Plans
The Canada Pension Plan Investment Board’s (CPPIB) role?
to invest contributions not needed to pay current benefits
_______ ________ delivers the CPP program benefits, the ________ _______ _______ collects the contributions, and the _______ manages the investment of funds.
Service Canada
Canada Revenue Agency (CRA)
CPPIB
Participation in CPP is mandatory for Canadians between ____ and ____ years old, who have earned income in excess of the minimum income amount, called the…..
18 to 65 years old
Year’s Basic Exemption (YBE) which is $3,500
Earnings on which contributions must be paid are those above the year’s basic exemption (YBE) and up to the…
year’s maximum pensionable earnings (YMPE).
What was the year’s basic exemption for 2024?
$3,500
If you were employed in 2023/24, what was the CPP contribution rate?
5.95% each (11.9% total) up to YMPE.
Employee pays 5.95% and Employer pays 5.95%
The contribution rates for the Canada Pension Plan (CPP) in 2024 have remained at 5.95% for both employees and employers on pensionable earnings up to a maximum of $68,500. If you are self-employed, you would be contributing at a rate of 11.90%. Additionally, starting in 2024, there is a higher second earnings ceiling of $73,200, which means earnings between $68,500 and $73,200 are subject to additional CPP contributions of 4% for employees and employers (or 8% for the self-employed) oai_citation:1,Canada: Pension plan contribution limits for 2024 - KPMG United States oai_citation:2,2024 CPP contribution limits rise - KPMG Canada oai_citation:3,2024 Canada Pension Plan Maximum Pensionable Earnings .
To calculate CPP contributions, you must deduct the _____ from your salary and then apply the contribution rate.
Ex: ($61,000 - $3500) *5.95% = $(new up8ted#) each
Year’s Basic Exemption
Contributors to the CPP/QPP program are eligible for four main benefits:
- Retirement pension benefits
- Disability benefits
- Survivors’ benefits
- Death benefit
(Regarding funding CPP) In 2024, employees and employers will begin contributing 4% each on an additional range of earnings called
Yearly Additional Maximum Pensionable Earnings (YAMPE)
The CPP contributory period begins
on January 1, 1966 or the day a contributor turns 18
The CPP contributory period ends..
the month before the pension begins (the month before the contributor’s 70th birthday), or the month the contributor dies, whichever comes first.
Those who choose to begin collecting before they turn 65 will receive a permanently reduced pension, which is adjusted by ____% for every month they retire before age 65.
0.6%
If they begin receiving payments at age 60 (the earliest possible date), the monthly payment will be _____% lower than if they had waited until they turned 65.
- 0%
0. 6 * 60months = 36%
For contributors who start collecting after age 65, the base amount of the pension increases by ____% for each month in which the recipient is over 65, to a maximum of 42.0%.
0.7%
60 months * 0.7= 42%
The CPP benefit paid to people who continue to work and make CPP contributions while already receiving a CPP retirement pension.
Post-retirement benefit (PRB) or (retirement pension supplement)
Starting at age, ____ employees and self-employed persons may choose to stop contributing to the CPP.
65
Disability pensions begin _____ months after the month in which the person became disabled, and they are payable every month until the beneficiary recovers from the disability, reaches age 65, or dies (whichever comes first).
four
With a disability pension, The four-month waiting period is waived if the disability occurs within _____ years of a previous disability.
five
Both the CPP and QPP disability pensions consist of a flat-rate component and an earnings-related component. The latter is equal to _____% of a retirement pension, calculated as if the contributor had reached 65 in the month when the disability pension became payable.
75%
This benefit may apply when a contributor to the CPP program is disabled during the contributory period before the person is eligible to collect the CPP retirement pension.
Disability Benefit
Regarding the death benefit, the amount payable under the CPP is equal to six months’ worth of a person’s calculated CPP retirement pension, or what this amount would have been had the person been age 65 at the time of death. The maximum amount payable is…
$2,500 total
Following the death of a qualified CPP or QPP contributor, a lump-sum death benefit is payable to his or her ________.
estate
Regarding the death benefit, to qualify, the deceased must have contributed to the relevant program for at least ______ years. If the contributory period
was longer than nine years, the contributor must have made contributions in_______ of the calendar years in the contributory period, or 10 calendar years, whichever is less.
three
1/3 (a third)
To be eligible for the Children’s Benefit when the contributor dies, the child must be under ____ or, for CPP, between ____ and ___ and a full-time student attending a recognized school or university.
18 years old
18 and 25
If the client is likely to live past 75, it makes mathematical sense to start drawing the full amount at age _____, rather than the reduced amount at age 60.
65
